Making money isn’t easy and requires a lot of hard work and dedication. It takes years of hard work to become successful in your life.
Money not only helps you in solving problems but also helps you in getting a social standing amongst your peers.
Apart from all these money also provides you access to resources like food, shelter, services, high standards of living, quality education, and much more. All these would be impossible without having had money.
Once your basic source of income is set up like a job, business, or freelance services, you ought to be thinking about what’s going to the next phase.
The next phase is putting your money to work for you to make money from money meaning, investing your money for money generation.
In this article, we will discuss this phase of life where we will provide you insights into how you can use your hard-earned money and make it work for you for even more money generation.
But first, there can be numerous ways you can do that but, you need to understand some primary principles so that you can find the opportunity that suits you well.
Primary Principle of Good Financial Standing
Becoming financially sound is important if you want to become wealthy. Everyone is making money but some are making more money than others with investing less. You’ll have to become like them so that for fewer hours of work, you get more money.
To get there, you would need to keep your basic principles regarding money clear and sound. The following are some of the basic principles which once followed, you would see an increase in your financial standing-
Take Good Debt
It is a common misconception that debt is bad and you should never take debt. Debt can be a source of massive opportunity. You can make millions if you know how to get get.
Debt can be of two types- Good Debt and Bad Debt.
Good debt is debt that is offered at a favorable rate of interest and the debt reserving does not affect your overall cash flow and financial standing.
Bad debt is debt that puts your financial freedom and cash flow at risk due to a high rate of interest or debt taken to purchase a liability like credit card debt, foreign traveling debt, etc.
You should always take debt to get an asset for you like real estate investment (Home Loan), or business loans. These types of loans can help you add assets to your portfolio which in the long term will put money into your pocket.
It may be taking away money for now in debt servicing but after you are done paying off the debt, it will be an additional source of income for you.
Find a Balance between Needs and Wants
We can bifurcate our spending into Needs and Wants. Needs are essential for life like food, shelter, clothing, insurance, etc. but some things are not essential for life but make life easier and enjoyable like the food at a fancy restaurant, a car, a bike, expensive watches, etc.
Now, You should not live your life frugally but a balanced approach is always a good way of handling such things.
For instance, instead of eating out in a fancy restaurant, you can cook the same exquisite dishes at home or instead of using a car, you can travel using public transport like a metro, or bus.
Making these choices is important for you as these things will help you maintain your wealth and spend on important things only.
Follow a Budget
A budget is necessary to conduct your spending and make sure that you do not miscalculate and spend more on items you do not want.
Budget helps you in directing your money and strategically investing it in various things. You can allocate a certain percentage of your income to food, shelter, investment, etc.
By allocating your income to a different component of the budget, you do not overspend and at the same time save money and invest.
Have Emergency Funds
One part of your income should always go into your emergency funds. Life is unexpected and emergency money is important, whether you become out of business or lose your job anything can happen.
To deal with that situation, you need to have an emergency fund. The emergency fund is different for different people and you’ll have to have funds for at least 7 months of your expenses.
This will give you ample time to find a new job or find something that can help you find a source of income for yourself.
Insurance is a Must
Many families are pushed down from a well-standing position to a financially broke or poverty-stricken category because they do not have a good insurance policy.
Healthcare is becoming expensive and you never know what kind of physical problem you might face. An insurance policy will help you in dealing with these types of problems. You need to have health insurance for your family and life insurance for yourself to ensure your insurance is taken care of.
How to Use Money to Make Money?
Now that we have understood the basic principles of money and other important insights, we need to learn how to use money to make money. Here are some of the ways using which you can make money using money-
Invest in Real Estate
Real Estate is one of the sectors that has huge potential and offers amazing returns for the investment that you make.
Whether it is purchasing and selling the property or earning a rental income from a building, you can amazing returns with this investment.
Purchasing a home is a high-value investment so, you need to invest a lot but the return that you’ll get is also amazing and can be considered as one of the safest investments amongst others.
You can also take a loan to purchase a house and offset the rental income you’ll get to the monthly EMI. You may still need to pay a little more but the overall investment will be profitable and once the EMI is fully paid off, you’ll be making a profit from your investment.
Earn Passive Income
In today’s age of inflation, you need to have a source of passive income for you otherwise, you’ll soon realize that the money that you are making especially by doing a job is not sufficient for your growing demands.
A passive income source can be YouTube, selling online courses, freelancing, etc The major component of passive income is your not-so-active participation.
Become a Silent Partner in a Business
By putting money to the right use, you can become a silent partner in a business. You can invest your money into a business that has the potential to grow big and earn a profit that the business will make.
This is also known as Angel Investing and you can start by investing in your friends or family and then further invest in other businesses to increase your portfolio.
Purposefully use your Inheritance
The inheritance that you get should be carefully evaluated and based on the profit and opportunity evaluation, you should make purposeful use of that inheritance.
Many people get agricultural land in heritance but they never use it or generate income from it which is like a lost opportunity.
You should either lend the land to someone or start an agro-tech business. The ago-tech business can have automated watering, fertilization, etc. This will help you invest less time getting most of the output out of what you have and earn money by selling the crop.
Explore Stock Market
The stock market can be an amazing tool if you know how to use it right. Some people grow their income 10X within a few weeks by trading on the stock market.
If you do not know stock trading then there are other long-term investment options like Stock purchase, mutual funds, etc. which you can explore to make a long-term investment.
The budget that you prepare must have a stock and Mutual funds section where you’ll allocate some amount of funds into these assets to ensure you do not miss out on the opportunity for stock market growth.
Conclusion
Many people make money as a complicated and hard-to-earn thing which is true but, it is doable and the entire process of making money is enjoyable as well.
When the crisp and sharp notes touch your hand, and the numbers on the screen go up, it offers a soothing and enjoyable experience.
There are numerous ways that you can use to put money into work for yourself to make more money, Here in this article, we have curated some but, always keep the above principles in mind and spend accordingly.
Life is all about choices and if you make the right choices by evaluating pros and cons, you’ll have a smooth life with good financial backing.
